Case Document 36 Filed 11/27/17 Page lunatic sow i
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

 

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NATIONAL UNION FIRE INSURANCE W11 .
COMPANY OF PITTSBURGH, PA, and
NEW HAMPSHIRE INSURANCE
COMPANY

Plainti?s, 17 Civ. 1329 (PAC)

-against~
OPINION ORDER

SOUTHERN COAL CORPORATION,

Defendant.


HONORABLE PAUL A. CROTTY, United States District Judge:

Plaintiffs National Union Fire Insurance Company of Pittsburgh, PA (?National Union?)
and New I-Iampshire Insurance Company bring this action against Defendant Southern
Coal Corporation for breach of a promissory note and quantum meruit unjust enrichment.
Plaintiffs now move for summary judgment. For the reasons that follow, the Court grants
National Union?s motion for summary judgment on the promissory note claim and sua sponte
dismisses the quantum meruit unjust enrichment claim as redundant.

BACKGROUND
Beginning in July 2009 and continuing thereafter, Plaintiffs issued workers?
compensation and general liability insurance policies to Defendant. ECF 31 at 1111 2-3. In return
for the coverage, Defendant was to pay insurance premiums. Id. at 11 5. Pursuant to the policies,
Plaintiffs conducted audits of Defendant?s books and records related to the policies, and, after

applicable adjustments and accounting for payments Defendant made, Plaintiffs determined that

 

Case Document 36 Filed 11/27/17 Page 2 of 7

Defendant owed an outstanding premium of $569,092. ECF 1 at 19-20; ECF 10 at1I1I 19-20;
ECF 31?3 at 1[ 8. In March 2014, Defendant acknowledged its debt owed for the outstanding
premium and executed a promissory note (?Note?) in favor of National Union. ECF 31 at 10.
Under the Note, Defendant agreed to pay National Union the ?principal sum? of $2,701,263
through scheduled installments. ECF 1-1 at 1, 5. Upon a default in payment, the ?entire unpaid
principal amount? would become immediately due and payable, and interest would accrue at
12% per annum. Id. at 1-2. The Note further states that Defendant ?promises to pay all costs
and expenses, including reasonable attorneys? fees, incurred in the collection and enforcement of
this Note.? Id. at 2. Defendant failed to make all payments to National Union required by the
Note, and thus defaultedtheir complaint, Plaintiffs asserted two alternative causes of action: (1) breach of
promissory note and (2) quantum meruit unjust enrichment. ECF 1 at 1111 31-49. The first cause
of action identified National Union as ?holder of the Note? and alleged that Defendant ?failed to
make payments to National Union as required by the Note.? Id. at 1111 32-33. The complaint did
not seek recovery of the entire ?principal sum? of $2,701,263 but rather stated that ?after
accounting for payments, credits, and all lawful setoffs, Southern Coal owes National Union a .
balance of not less than $559,286.? Id. at 1{ 35.1 National Union seeks enforcement of its
contractual rights and remedies under the Note. Id. at 1[ 38. Thus, the first cause of action
concluded, ?Plaintiff National Union respectfully requests that this Court enters judgment against

Southern Coal in the amount of $559,286, plus attorneys? fees, costs, expenses, prejudgment and

 

I Plaintiffs do not seek the full amount of the Note; apparently Defendant made ?several
payments under the Note? before breaching its obligation. ECF 29 at 2. All parties agree,
however, that $559,286 represents the remaining principal amount currently owed under the
terms of the Note.

Case Document 36 Filed 11/27/17 Page 3 of 7

post?judgment interest.? Id. at 1[ 38. The second cause of action alleged that the alternative 
to Plaintiffs? breach of contract causes of action, Plaintiffs are entitled to recover under a theory
of Quantum Meruit/Unjust Enrichment.? Id. at 40. It explained, ?Southern Coal has failed to
pay Plaintiffs for the reasonable value of the services provided, which totals at least $559,286its answer, Defendant admitted that it received the insurance policies from Plaintiffs,
did not pay the outstanding premium to Plaintiffs, executed the Note in favor of National Union,
and ?failed to make payments to National Union.? ECF 10 at1l1l 17, 21-22, 33.

In their motion for summary judgment, Plaintiffs argued that is clear that Southern
Coal breached its obligations under the Note, and, accordingly, summary judgment on Plaintiffs?
claim for breach of the Note is appropriate.? ECF 29 at 2. In its response, Defendant
?acknowledge[d] that Plaintiffs are entitled to a judgment in accordance with the relief sought in
their Motion? and attached a proposed judgment awarding damages in the amount of $559,286.
ECF 32, 32-1. Plaintiffs countered with their own proposed judgment, noting that they also
sought attorneys? fees and prejudgrnent interest, which are specifically provided for in the
Note, and post-judgment interest.? ECF 33. The Court denied Defendant?s motion for leave
to file a surreply, and the motion for summary judgment may now be resolved. ECF 35.

DISCUSSION

1. Legal Standards

Summary judgment shall be granted where ?the movant shows that there is no genuine
dispute as to any material fact and that the movant is entitled to judgment as a matter of law.?
Fed. R. Civ. P. 56(a). ?If no rational fact ?nder could find in the non-movant?s favor, there. is no

genuine issue of material fact, and summary judgment is appropriate.? Citizens Bank of

Case Document 36 Filed 11/27/17 Page 4 of 7

Cleamater v. Hunt, 927 F.2d 707, 710 (2d Cir. 1991) (internal citations omitted). ?In an action
on a promissory note[,] upon a showing of no material question concerning execution and
default, summary judgment is appropriate.? Royal Bank of Canada 12. Mahrle, 818 F. Supp. 60,
62 (S.D.N.Y. 1993). The Court applies New York substantive law because this is a diversity
case and because the Note contains a choice-of?law provision stipulating that New York law
governs the rights of the parties. See Amusement Industry, Inc. v. Stern, 786 F. Supp. 2d 758,
771?72 (S.D.N.Y. 2011); ECF 1-1 at 3.
II. Analysis

There is no dispute that National Union is entitled to summary judgment on its claim for
breach of promissory note in the amount of $559,286. National Union is listed as the ?Payee? on
the Note. ECF 1?1 at 1. Defendant admits that it executed the Note and defaulted, and both
parties agree that National Union is entitled to $559,286. ECF 31 at 111] 10, 11, 13. Accordingly,
the Court grants summary judgment in favor of National Union on its claim for breach of
promissory note.

NHIC, however, is not entitled to recover on this claim. The Note does not mention
NHIC, and the complaint seeks relief only for National Union. See v. Bo?a, 98-cv?
2696, 1999 WL 155991, at *2 (S.D.N.Y. 1999) (?As the note names only Bergmann as payee-?w
for whatever reasons?Zarintash cannot claim to have suffered an injury from the note having
gone unpaid?). NHIC also cannot recover on the alternative claim for quantum meruit unjust
enrichment, as the subject matter of this claim is governed by the insurance policies and the
Note, and Defendant does not dispute that both the policies and the Note are valid, enforceable
- contracts. See ECF 31 at 1111 5, 10', ImagePoint, Inc. v. JPMorgan Chase Bank, Nnt?l Ass 27

F.Supp.3d 494, 516 (S.D.N.Y. 2014) there is a valid and enforceable contract between

Case Document 36 Filed 11/27/17 Page 5 of 7

the parties, and the subject matter of the unjust enrichment claim is covered by the contract[,] the
unjust enrichment claim must be dismissed.? (quotation omitted)). Therefore, the Court
dismisses the second cause of action as redundant.

The only remaining question is whether National Union is entitled to reasonable
attorneys? fees, prejudgrnent interest, and post?judgment interest. The Court recognizes that the
Note allows for this relief and Plaintiffs sought such relief in their complaint. Thus, Defendant
had notice of this request and is not prejudiced by Plaintiffs? failure to repeat it in their motion
for summary judgment. See In re Grand Jury Subpoenas, 235 F. Supp. 3d 472, 485 (S.D.N.Y.
2017) (recognizing that the rationale for disregarding issues raised for first time in reply brief is
that ?the opposing party may not have an adequate opportunity to respond to 

The Note expressly provides for reasonable attorneys? fees. ?Under New York law, a
contract that provides for an award of reasonable attorneys? fees to the prevailing party in an
action to enforce the contract is enforceable if the contractual language is sufficiently clear.?
NerJets Aviation, Inc. v. LHC Communications, LLC, 537 F.3d 168, 175 (2d Cir. 2008). The
Court finds that the language in the Note is sufficiently clear and that National Union is entitled
to submit a claim for ?all costs and expenses, including reasonable attorneys? fees, incurred in
the collection and enforcement of this Note.? ECF 1-1 at 2.

The Note also expressly provides for prejudgment interest, stating that ?upon an Event of
Default (as defined below), interest shall continue to accrue on this Note at the rate of interest per
annum equal to the lesser of or the Maximum Rate, and shall be payable on demand of the
Payee.? ECF 1?1 at 1. The ?Maximum Rate? is ?the maximum lawful rate . . . which may be
contracted for . . . in accordance with applicable law.? Id. Although New York State?s civil

usury statute prohibits charging an interest rate above 6% on loans or forbearances, that

Case Document 36 Filed 11/27/17 Page 6 of 7

restriction does not apply to amounts over $250,000 or to defaulted obligations. See N.Y.G.0.L.
Manfra, Tordella Brookes, Inc. v. Bunge, 794 F.2d 61,63 n.3 (2d Cir.
1986) (?In addition, the usury laws do not apply to defaulted obligations?). Thus, National
Union is entitled to prejudgment interest at the rate of 12% per annum from the date of default. .
National Union alleges that this interest began to accrue on January 15, 2015, ECF 33-1 at 1, and
the Court finds this date appropriate, given that the Note provided for the final installment to be
paid on December 25, 2014, ECF 1-1 at 5.
Although the Note does not expressly provide for post~judgment interest, it is available as
a matter of statute. Specifically, 28 U.S.C. 1961 applies to ?any money judgment in a civil
case recovered in a district court,? even if it is a result of a breach of a contract governed by state
law. See Cappz'eilo V. Pub! ?ns, Inc, 720 F.3d 109, 112 (2d Cir. 2013). As such, National
Union is entitled to post?judgment interest to be calculated in accordance with 28 U.S.C. 1961.
CONCLUSION
For the foregoing reasons, Plaintiffs? motion for summary judgment is GRANTED as to
National Union?s claim for breach of promissory note. Plaintiffs? alternative claim for quantum
meruit unjust enrichment is DISMISSED. 
The Court awards National Union the following relief:
1. $559,286 in unpaid principal;
2. Prejudgment interest at the rate of 12% per annum from January 15, 2015',
3. Post-judgment interest calculated in accordance with 28 U.S.C. 1961 that shall continue
until the Judgment is fully paid;
4. The amount of attorneys? fees incurred in enforcing Defendant?s obligations under the

Note. National Union shall make a submission related to attorneys? 'fees within 14 days

Case Document 36 Filed 11/27/17 Page 7 of 7

of this Judgment. The Court shall, in turn, enter a Final Judgment that incorporates all

attorneys? fees, prej udgment interest, and post?judgment interest as of that date.

Dated: New York, New York SO ORDERED

November 27, 2017 
. 

PAUL A. CROTTY 
United States District Judge